Union Cabinet has approved "Partial Credit Guarantee Scheme" for purchase of high-rated pooled assets from financially sound Non-Banking Financial Companies (NBFCs)/Housing Finance Companies (HFCs) by Public Sector Banks (PSBs).
About:
PSBs can purchase high-rated pooled assets from financially sound NBFCs/HFCs, with the amount of overall guarantee provided by government till the first loss of up to 10 per cent of fair value of assets being purchased by banks or Rs 10,000 crore, whichever is lower.
The scheme would cover NBFCs / HFCs that may have slipped into SMA-0 category during the one year period prior to 1.8.2018, and asset pools rated "BBB+" or higher.
The window for one-time partial credit guarantee offered by Gol will remain open till 30th June, 2020 or till such date by which Rs. 1,00,000 crore assets get purchased by the Banks, whichever is earlier.
Power has been delegated to the Finance Minister to extend the validity of the Scheme by up to three months taking into account its progress.
Major Impact: The scheme will help address NBFCs/HFCs resolve their temporary liquidity or cash flow mismatch issues, and enable them to continue contributing to credit creation and providing last mile lending to borrowers, thereby spurring economic growth.
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